Part II. Big Fish Tackle Co. Ltd. reports the following inventory transactions for its fishing rods...

    

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Part II. Big Fish Tackle Co. Ltd. reports the following inventory transactions for its fishing rods for the month of April. The company uses a perpetual inventory system. Instructions Date Explanation Units Unit Cost/Price Total Cost Apr. 1 Beginning inventory 50 $230 $11,500 6 Purchases 35 240 8,400 9 Sales (55) 350 14 Purchases 40 245 9,800 20 28 Sales Purchases (50) 360 30 250 7,500 a. Using FIFO, determine the cost of goods sold and the cost of ending inventory. b. Record journal entries for the sales transactions on April 9 and April 20. Both sales were on credit. C. If the company does change to the average cost formula and prices continue to rise, explain whether you expect the cost of goods sold and ending inventory amounts to be higher or lower than these amounts when using FIFO. d. Determine the cost of goods sold and cost of ending inventory using average cost. (Use e. unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.) Continue to assume that the company uses average cost assumption. When the company counted its inventory at the end of April, it counted only 49 fishing rods on hand. Record the journal entry, if any, the company should prepare to record this shortage. f. If the company had not discovered this shortage, identify whether Inventory, COGS, and Retained Earnings would be overstated or understated and by what amount. Part II. Big Fish Tackle Co. Ltd. reports the following inventory transactions for its fishing rods for the month of April. The company uses a perpetual inventory system. Instructions Date Explanation Units Unit Cost/Price Total Cost Apr. 1 Beginning inventory 50 $230 $11,500 6 Purchases 35 240 8,400 9 Sales (55) 350 14 Purchases 40 245 9,800 20 28 Sales Purchases (50) 360 30 250 7,500 a. Using FIFO, determine the cost of goods sold and the cost of ending inventory. b. Record journal entries for the sales transactions on April 9 and April 20. Both sales were on credit. C. If the company does change to the average cost formula and prices continue to rise, explain whether you expect the cost of goods sold and ending inventory amounts to be higher or lower than these amounts when using FIFO. d. Determine the cost of goods sold and cost of ending inventory using average cost. (Use e. unrounded numbers in your calculations but round to the nearest cent for presentation purposes in your answer.) Continue to assume that the company uses average cost assumption. When the company counted its inventory at the end of April, it counted only 49 fishing rods on hand. Record the journal entry, if any, the company should prepare to record this shortage. f. If the company had not discovered this shortage, identify whether Inventory, COGS, and Retained Earnings would be overstated or understated and by what amount.